Tax Benefits of Private Health Insurance No One Has Told You About
Of course, you get private health insurance for yourself or your family because you learned that having one will make life amidst illnesses or health problems a little easier and more manageable. Your colleagues, friends, or even loved ones had surely told you about the usefulness of having private health insurance such as being able to select the doctor of your choice when ailments strike, having access to a private hospital room or facility, having the freedom to avoid long public hospital waiting lists.
But other than these, don’t you know that getting private health insurance gives you tax benefits too?
If you haven’t heard about tax incentives on MLS or PHIR, then you have come to the right place.
Private Health Insurance: A Smart Tax Incentive from the Medical Levy Surcharge
The World Health Organisation recognises the Australian Health System as one of the premier ones worldwide.
But how does the Australian government do it?
There is this scheme, called Medicare, which gives Australians access to health care. To get this system going, funds to support it have to be continually generated. Hence, it is partially funded by the Medical Levy Surcharge (MLS), which is an amount charged on citizens, at a rate of two percent (2%), based on their taxable income. Note that this is collected by the government apart from the tax one has to pay on his taxable income.
But for one who has taken out private health insurance for himself or his family, this may not be the case. According to the ATO, one may not be required to pay the MLS if he has the prescribed or appropriate level of private patient hospital cover. This is actually one of the most valuable tax incentives a citizen could get from getting private health insurance.
Rebates from Private Health Insurance: a Tax Back to Cover Your Insurance Premiums
As defined by the Australian Taxation Office (ATO), a private health insurance rebate (PHIR) is an amount that any citizen may claim for premiums paid for a private health insurance policy. This amount is virtually what the government contributes to helping Australians with the cost of their private health insurance premiums. It is noteworthy too that private health insurance rebates are actually income-tested. This just means that the amount you receive as rebate depends on your income capacity. Consequently, one who earns higher income may only be entitled to a lower rebate or even none at all.
Depending on your age and/or marital status, PHIR comes in various rates. For example, single individuals who earn ninety thousand dollars ($90,000) annually or at the end of the financial year gets roughly twenty-five percent (25%) of their premium costs back.
On the other hand, families with incomes under one hundred eighty thousand dollars ($180,000) may receive an approximate of seventeen percent (17%) rebates. Meanwhile, more substantial rebates may be given to Australians who are 65 years old and up. Some even get rebates from their premiums in rates as high as thirty-four percent based on an annual income of less than ninety thousand dollars ($90,000).
While private health insurance secures your health and life, it gives you tax benefits too. Now, that’s hitting two birds with one stone. Learn more about health insurance today.